SP down one cent to 4.5 cents @ 10:26 AM
ASX ANN today
20/08/2009 Testing update
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=00978985
PRODUCTION TESTING UPDATE –20 AUGUST 2009
Golden Eagle Field Grand County Utah
- Paradox Basin #2 is being suspended and will be monitored over the next month.
- The maximum gas flow rate during testing of 1.6MMcfd was not sustainable and associated with high levels of formation water.
- A total of 385,000 scf of gas production was measured during testing with appreciable gas also flared without metering.
- In light of the results Golden State will review the effectiveness of the fracture stimulation and monitor the well to determine whether further attempts to remediate water production and stimulate the formation are required.
- Paradox basin #2 has successfully appraised the flanks of the Golden Eagle structure increasing the known extent of the field.
- The completion rig will move to Paradox Basin #1 to conduct a work-over and re-complete the well for extended production tests.
- Work has commenced on the design and permitting on Paradox Basin # 3 which will be a dedicated Ismay Formation production and appraisal well to be located up dip of the Paradox Basin #1 discovery well.
Testing of the Ismay Formation in Paradox Basin #2 has been suspended. The well will be monitored and periodically flowed while a review into the effectiveness of the completion is conducted.
Gas was produced from the Ismay Formation at rates up to 1.6 million cubic feet per day. High levels of completion brines and formation waters are associated with the gas production. The co-produced waters are likely sourced from adjacent water zones rather than from the Ismay gas zone, as logging suggests low connate saturation in the gas zone. In it’s current state Paradox Basin #2 is not viable as a production well.
The Ismay Formation was perforated on 24 July and produced gas at 237,000 cf/day, a similar rate to that observed in Paradox Basin #1 prior to stimulation. Following perforation a series of reservoir performance tests were conducted to provide data needed to determine the design of the fracture.
A gel based fracture stimulation was conducted on the 5th August. After stimulation the well unloaded 286 barrels of load fluids before gas was detected and flow was
diverted to the separators. The initial gas rate was 885,000 cf/day which peaked at 903,000 cf/day after 1 ½ hours. Associated water production was high and after 8 hours the gas rate declined to 289,000 cf/day before the well stopped flowing.
The 3 ½” tubing which was required for the fracture stimulation was considered too large in diameter for the expected flow rates. Rig 234 was moved off location and a completion rig was mobilised to run a string of 2 3/8” production tubing. Demobilisation of Rig 234 and running of the production string was completed on the 14th of August and a coil tubing unit was utilised to assist in lifting water and a further 389 barrels of saline fluid was recovered before a swabbing unit was utilised to lift another 58 barrels at which stage gas was observed. Gas was flared at a peak rate of 1.6MMscf/d before decreasing to 115,000 cf/day after approximately 1 hour.
Swabbing has since continued with the expectation that the well would clean-up after unloading fluids associated with the fracture stimulation. As the salinity of the recovered waters has increased it appears water is being derived from the formation. Log evaluation indicates the Ismay Formation gas zone has low levels of connate water and it is suspected the water may be sourced from adjacent water bearing intervals.
A tracer log has been run to determine the placement of the fracture, and is currently being processed. Initial indications are that the fracture has a greater vertical extent than desired, and has not effectively stimulated the Ismay Formation. Should the evaluation indicate the water is derived from adjacent zones then several options are available to possibly remediate the situation. These include a cement squeeze and re-fracturing or possibly an ultra short radius lateral into the Ismay Formation.
Paradox Basin #2 has increased the known vertical extent of the Ismay Formation gas accumulation confirming the presence of gas down dip. Paradox Basin #2 is located on the southern flank of the Golden Eagle structure and is 317 feet lower than Paradox Basin #1 at the Ismay Formation level. The location was placed over the underlying Mississippian structure and was fixed under the terms of the Farmin agreement.
A vertical seismic profile which was acquired in Paradox Basin # 2 has shown the seismic tie to the Akah Formation to be somewhat lower than the Akah reflector on the 99X seismic control line. The VSP is suggestive that Paradox Basin #2 is located south of the main bounding fault. The implication is that seismic line 99X, is wrongly positioned or the well has crossed the fault which is a possibility as the strike of the fault is unknown. Golden State is in the process of resolving the implications of the VSP result.
The completion rig will now recomplete and test Paradox Basin #1. Testing of Paradox Basin #1 was suspended in December 2008 due to inclement weather and a physical blockage of the production tubing. Since that time the well test results have been reviewed and it is apparent that the well would benefit from a significant recompletion possibly including additional fracture stimulation.
Work has also commenced on permitting and designing a dedicated Ismay Formation production well to be located approximately 1.2 km north east of Paradox Basin #1. The well would target the Ismay Formation up dip of Paradox Basin #1. Target depth would be approximately 9,800 feet and the company is investigating drilling laterally from the Paradox Basin #1 location. A lateral well with a 36o deviation would add approximately 1500 feet in length. As the bulk of the deviated section would occur in relatively fast drilling formation the associated extra drilling costs would represent a considerable saving on site costs and access costs required for a separate vertical location. In addition the high angle completion would maximise exposure to productive interval.